As per Relevance of the word management, we have this rfc below:
Network Working Group G.
Request for Comments: 1744
Category: Informational December 1994
Observations on the Management
the Internet Address
Status of this
This memo provides information for the Internet community. This
does not specify an Internet standard of any kind. Distribution
this memo is unlimited
This memo examines some of the issues associated with the
management practices of the Internet IPv4 address space, and
the potential outcomes of these practices as the unallocated
pool shrinks in size. Possible modifications to the
practices are examined, and potential outcomes considered.
general conclusions are drawn, and the relevance of these
to the matter of formulation of address management policies for IPv
are noted
1.
The area explicitly examined here is the allocatable globally
IPv4 address space. Explicitly this includes those address
uniquely assigned from a single comprehensive address pool
specific entities which are then at liberty to assign
address values within the address group to individual hosts.
address group is handled by the technology as a single
entity
At present these addresses are allocated to entities on a
available, first-come, first-served allocation basis, within
scope of a number of administrative grounds which attempt to
the allocation process to result in rational use of the space,
attempt to achieve a result of a level of equity of availability
is expressed in a sense of multi-national "regions" [1].
In examining the current management policies in further detail it
useful to note that the IPv4 address space presents a number
attributes in common with other public space resources, and there
parallels in an economic analysis of this resource which include
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RFC 1744 Management of Internet Address Space December 1994
- the finite nature of the
This attribute is a consequence of the underlying
which has defined addressed entities in terms of a 32 bit
value. The total pool is composed of 2**32 distinct values (
all of which are assignable to end systems).
- the address space has considerable market
This valuation is a consequence of the availability and
deployment of the underlying Internet technology that
uniquely addressed entities the capability to conduct direct end
to-end transactions with peer entities via the Internet.
parameters of this valuation are also influenced by
of efficiency of use of the allocated space, availability of
system based internet technologies, the availability of Internet
based service providers and the resultant Internet market size
- address space management is a necessary
Management processes are requires to ensure unique allocation
fair access to the resource, as well as the activity of
maintenance of allocation record databases
Increasing rates of Internet address allocation in recent years
that the IPv4 address space is now a visibly finite resource,
current projections, assuming a continuation of existing demand
addresses predict unallocated address space exhaustion in the next 6
- 12 years (rephrasing current interim projections from the
Address Lifetime Expectancy Working Group). There are two
questions that arise from this prediction. Firstly what is
likely outcome of unallocated address space exhaustion if it
occur, and secondly, are there corrective processes that may
applied to the current address management mechanisms that could
both more equitable allocation and potentially extend the lifetime
the unallocated address space pool. These two issues are
in the following sections
2. Outcomes of Unallocated Address Space Exhaustion - No change
current Address Management
As the pool of available addresses for allocation depletes,
initial anticipated outcome will be the inability of the
address pool to service large block address allocation requests
Such requests have already been phrased from various
operators, and the demand for very large address blocks is likely
be a continuing feature of address pool management. It is noted
the overall majority of the allocated address space is
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RFC 1744 Management of Internet Address Space December 1994
inefficiently utilised at present (figures of efficiency of use
less than 1% are noted in RFC 1466, and higher efficiency
is readily achievable using more recent routing technologies, such
Variable Length Subnet Masks (VLSM) and disjoint subnet routing).
Given the continuing depletion of the unallocated address pool,
the consequent inability to service all address allocation requests
it is a likely outcome of interaction between those entities
allocated address space and those seeking address allocation
such allocation requests could be satisfied through a
transaction. In this situation an entity already in possession of
sufficiently large but inefficiently utilised allocated address
could resell the block to a third party, and then seek allocation
a smaller address block from the remaining unallocated address space
The implication is that both address blocks would be more
utilised, although it is the entity which has large blocks
allocated address space which would be the primary beneficiary
such transactions, effectively capitalising on the opportunity
of higher efficiency of address block use
Such reselling / trading opportunities which involve the use of
unallocated address pool would in all likelihood be a short
scenario, as the high returns from this type of trading
increase the allocation pressure from the pool and act to
depletion rates as more pressure is placed to claim large
blocks for later resale once such blocks are no longer available
the unallocated pool
Following exhaustion of the unallocated address pool a free
environment in address blocks is a probable outcome, where
blocks would be bought and sold between trading entities.
consequent market, if unregulated, would act to price address
at a level commensurate with the common expectation of the
value of addresses, trading at a price level reflecting both
level of demand, the opportunity cost of more efficient address use
and the opportunity cost of deployment of additional or
internetworking technologies to IPv4. It is interesting to note
within such an environment the registry (or whatever takes the
of a registry in such an environment) becomes analogous to a
office, acting to record the various transactions to ensure
continued accuracy of "ownership" and hence acts as a source
information to the purchaser to check on the validity of the sale
checking on the validity of the "title" of the vendor. This
on the characteristic features of Internet address registries,
effectively become analogous to "titles offices", which typically
structured as service entities with "lodgement fees" used to fund
action of recording title changes. Whether existing registries
to undertake this new function, or whether other entities
this function is a moot point - either way the function is
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RFC 1744 Management of Internet Address Space December 1994
necessary adjunct to such a trading environment
It is also anticipated that in an unregulated environment the
in address blocks would very quickly concentrate to a position
address trading between major Internet providers, where a
number of entities would control the majority of the traded
(market efficiency considerations would imply that traders with
inventories would be more efficient within this trading domain).
is also reasonable to expect that the Internet service
would dominate this trading area, as they have the greatest level
vested interest in this market resource. This would allow
Internet service provider to operate with a considerably
degree of confidence in service lifetime expectation, as the
provider would be in the position of price setting of the
address resource and be able to generate an address pool as a
against local address depletion for the provider's client base
There is of course the consequent risk of the natural tendency
these entities forming a trading cartel, establishing a
monopoly position in this space, setting up a formidable
against the entry of new service providers in this area of
market. Such a scenario readily admits the position of monopoly
based service price setting. Compounding this is the risk that
providers set up their own "title office", so that in effect
major trading block actually controls the only means of
legitimacy of "ownership", which in terms of risk of anti-
trading practices is a very seriously damaged outcome
Assuming a relatively low cost of achieving significantly
efficiency address utilisation than at present, then the
market is bounded only by the costs of agility of renumbering.
renumbering would be anticipated to occur in response to
of a different address block in response to changing local
requirements, and the frequency of renumbering may occur in cycles
duration between weeks and years. Markets would also be
by deployment costs, where local address trading within a
domain would have little cost impact on deployment services (as
aggregated routing scenario would be unchanged for the provider
the provider's peers) whereas trading in small sized blocks
provider domains would result in increased operational service
due to increased routing costs (where efforts to create
routing entries are frustrated by the effects of address leakage
other routing domains).
In examining this consequent environment the major technical
is strong pressure for dynamic host address assignment services
where the connection and disconnection of hosts into the
environment will cause a local state change in allocated
(which may in turn trigger consequent extended dynamic
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RFC 1744 Management of Internet Address Space December 1994
from time to time to accommodate longer term address usage trends).
It is also reasonable to predict a strengthening market for
address translation technologies, as an alternate client strategy
the purchase of large address blocks from the trading market (
scenario is the use of a private, potentially non-unique
space within the client network, and the dynamic translation of
host addresses into a smaller unique Internet routed address pool
support external end-to-end sessions), and also the
market for firewall boundary technologies which also admit the use
private address space within the client domain
While it is not possible to accurately predict specific outcomes,
would appear to be the case that increasing overall efficiency
address utilisation will be most visible only after
address pool exhaustion has occurred, as there is then a
strong economic motivation for such activity across all the
Internet address space
As perhaps a cautionary comment regarding evolutionary
for IPv4, it would also appear to be the case that
technologies will not assume a quantum increase in economic
simply because of unallocated address pool exhaustion.
technologies will only lever additional advantage over IPv4 once
marginal cost of increased IPv4 address space deployment
exceeds the marginal cost of deployment of new technologies,
situation which may not occur for some considerable time
unallocated address pool exhaustion
3. Modification of Current Internet Address Management
The three major attributes of the current address
procedures from the unallocated pool are "first come first served
(FCFS) and allocation on a "once and for all" (OAFA) basis, and
absence of any charge for address allocation (FREE).
As noted above, the outcomes of such a process, when constrained
the finite quantity of the resource in question, ultimately leads
a secondary market in the resource, where initially
resources are subsequently traded at their market valuation.
secondary trade benefits only those entities who established
primary position from the unallocated pool, and it is noted
concern that the optimal behaviour while the unallocated pool
is to hoard allocated addresses on the basis that the
market will come into existence once the pool is exhausted. Such
market does not benefit the original address management operation
nor does it necessarily benefit the wider community of current
potential interested parties in the Internet community
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RFC 1744 Management of Internet Address Space December 1994
It is also noted that the outcome of a free address allocation
is the vesting of the management of the address space to the
Internet Service Providers, on the basis that in the absence of
client address allocation charging policies which have the
of ensuring an independent address management function,
entities who have the greatest vested interest in the quality of
address allocation and registration function will inevitably
such an operation in the absence of any other mechanism. The
within this scenario is that placing the major asset of
communications medium into the sphere of interest of the
entities trading within that medium acts to increase the risk
anti-competitive monopolistic trading practices
An alternate address management strategy is one of allocation
recovery, where the allocation of an address is restricted to
defined period, so that the allocation can be regarded as a lease
the resource. In such an environment pricing of the resource is
potential tool to achieve an efficient and dynamic address
mechanism (although it is immediately asserted that pricing alone
be insufficient to ensure a fair, equitable and rational outcome
address accessibility and subsequent exploitation, and
pricing and associated allocation policies would be a
approach to such a public resource management issue).
It is noted that pricing as a component of a public
management framework is a very common practice, where price
policy are used together to ensure equitable access,
utilisation and availability for reallocation after use.
practices which include features of higher cost for larger
blocks assist with equitable access to a diversity of entities
desire address allocation (in effect a scarcity premium), and
practices can be devised to encourage provider-based dynamic
allocation and reallocation environments
In the same fashion as a conventional lease, the leasee would
the first option for renewal of the lease at the termination of
lease period, allowing the lease to be developed and maintain
market value. Such pricing policies would effectively imply
differential cost for deployment of a uniquely addressed host
potential full Internet peering and reachability (including
reachability) and deployment of a host with a locally defined (
potentially non-unique) address and consequent restriction to
reachability
It is also observed that pricing policies can encourage
address space utilisation through factors of opportunity cost
unused space, balanced by the potential cost of host
practices or the cost of deployment of dynamic address allocation
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translation technologies
There are a number of anticipated outcomes of a management
which including pricing elements for the IPv4 address
Firstly current address space utilisation projections (
useful lifetime for the pool of unallocated addresses) would
further into the future due to the factors of cost pressure for
efficient address utilisation, and the additional cost of issuing
local resource with a globally unique address and the
cost of extravagant use of global addresses with purely
domains
Secondly dynamic host address binding technologies, and
network address translation technologies would be anticipated to
widely deployed, based on the perceived cost opportunities of
such technologies as an alternative to extensive static host
binding using globally unique addresses. Use of such
would imply further extension of the lifetime of the address pool
Such pricing practices could be applied on a basis of all
address allocations, leaving those entities with already
address blocks outside of the lease mechanism. Alternatively
previous allocations could be converted to leases, applying a
management policy across the entire address space and
levering the maximal benefit from such pricing policies in terms
maximising the lifetime of the address space and maximising the
of the address space. In such a situation of conversion some
of recognition of previous implicit OAFA allocation policies can
offset through delay of conversion to lease and also
conversion of such previously allocated addresses to the lease
waiving the lease purchase costs in such cases
4. Internet Environment
Pricing for IPv4 addresses as a component of the overall
management framework is by no means a novel concept, and despite
advantages such pricing policies may offer in terms of outcomes
efficiency of utilisation, fair and equitable access, security
allocation and consequent market value, and despite the address
exhaustion time offsets such policies offer, it is the
case that no explicit pricing policies have been
introduced into the Internet address allocation processes to date
There are two predominate reasons offered in this analysis.
first is the somewhat uncertain nature of the exact origin of
ownership of the IPv4 address space, and the unallocated address
in particular. The address pool has been administered according
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RFC 1744 Management of Internet Address Space December 1994
policies drafted by the Internet Assigned Numbers Authority (IANA).
The policies drafted by IANA are effectively policies which are
outcome of the same consensus seeking approach used within
Internet Standards process, and it is noted that within such
environment unilateral declarations of ownership and
assertions of policy control have difficulty in asserting
effective role within the Internet community and such
are generally incapable of gathering consensus support (It can
argued that "ownership" is not a relevant concept within this domain
as the essential attribute of such address elements are
uniqueness within the global domain, and such an attribute is
feasible through common recognition of a coordinated and
management environment rather than the historical origin of
resource in question). Secondly there is no formal recognition
the address space as being a shared international resource which
within the purview of national public resource management
and administrative entities of each nation, nor is there
recognition of the address space as a private resource owned
administered by a single entity
Recent policy changes, whereby large segments of the
address pool have been assigned to international bodies on a
basis, with further assignment to bodies within national contexts
have been undertaken with a constant address allocation policy
FCFS, OAFA and FREE, and although some effort has been made
increase the deployment efficiency through explicit allocation
enumeration, the general characteristics of address allocation
unchanged to date (those characteristics being of course FCFS,
and FREE).
One potential scenario is to speculate that pricing processes
by the address allocation agency are not feasible within the
Internet environment to the extent that any such policies
significantly motivate increased address deployment efficiency to
levels required for longer term unallocated address pool
extension. The lack of capability to employ pricing as a
mechanism, even to the extent of cost recovery of the allocation
subsequent registry maintenance function has a number of
longer term outcomes
a) such functions will be restructured and operated from
authorised national administrative bodies for each nation
Here the observation that the address pool delegation
within the current Internet environment has not to date
aligned with recognised national public communications
administrative entities is an expression of the major
that the unallocated address pool is not recognised as
intrinsically the same public resource entity as the
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RFC 1744 Management of Internet Address Space December 1994
spectrum or the telephone number space. The consequence
this mismatch between existing public resource
structures and IPv4 address space management implies
public operation for this activity on a national
is not a commonly observed attribute. The competency of
established public resource management structures in
what continues to be a remarkably vibrant and
technology-influenced domain must be questioned.
outcomes may possibly include a rational and equitable
space management mechanism, but would also in all
include a cost of a heavy damping factor on
technological innovation and refinement of the
technology base upon which the address space is sited as
longer term outcome
b) such functions are operated (and/or funded) by Internet
Providers. This is a more common scenario at present in
Internet IPv4 environment, and although such an
environment does admit the potential for adequate funding
competent administration of the operation, the
association of these entities who have established interests
the operation of enterprises based on the provision of
across the address space (i.e., strong interest in
the address space) has a natural tendency to express
of the market by established interests, threatening fair
to the common resource and threatening the open market
deployment of the technology. It is reasonable to suggest
such alignments are undesirable from a public
perspective
c) such functions are inadequately funded to service the level
activity, and / or administrated informally and
managed poorly, and the essential attribute of reliable
space management is not achieved
It is noted that these issues are largely unresolved within
Internet community today, and tensions between established
incoming Internet Service providers over equitable access to
unallocated address space pool are a consequent risk
5. Concluding
In the absence of the capability to price the management of
Internet address space at administrative cost levels, let alone
capability to set pricing of address leasing at prices which
the finite nature of the resource and reflect (even in part)
market value of the resource, as a component of overall
address management practices, the most likely scenario is
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RFC 1744 Management of Internet Address Space December 1994
continuation of the FCFS, OAFA and FREE address management
until exhaustion of the unallocated address pool occurs
It is perhaps a sad reflection of the conflict of short
objectives and longer term considerations that the evident short
motivations of ready and equitable access to the IPv4 address (
were the motivational factors in determining the current
address allocation policies) run the consequent risk of monopoly
based restrictive trade and barrier-based pricing as a longer
outcome of unallocated address space exhaustion
While free address allocation and the adoption of policies
include pricing components both ultimately produce an outcome
strong pressure for increased address space utilisation efficiency
the removal of the neutral presence of the unallocated address
does induce considerable risk of open market failure within
Internet itself if free address allocation policies continue
pool exhaustion has occurred
Further strengthening of the current FCFS, OAFA and FREE
allocation policies, in an effort to induce higher
utilization efficiencies across the remaining address space is not
viable address management strategy refinement, in so far as
trading market will then commence before unallocated pool exhaustion
trading in large address blocks which are precluded from
strengthened address allocation policies
The most negative aspect of this are is that these processes
erode levels of confidence in the self regulatory capability of
Internet community, such that significant doubts will be expressed
the larger community the Internet process is one which is
for effective formulation of common administrative policy of one
the core common assets of the Internet
These outcomes can all be interpreted as policy failure outcomes
The seriousness of these outcomes must be assessed in the terms
the anticipated timeframe of such policy failure.
expectations of unallocated address pool lifetime of 6 - 12
does allow the Internet community some time to revisit their
of administrative process definition, but this observation
tempered by the IPv6 process and by increasing levels of pressure
the address space in terms of growth in address demand through
of deployment of the Internet itself
It is perhaps an appropriate conclusion to acknowledge
impediments of existing processes to admit any significant process
policy change that would produce a more efficient and
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RFC 1744 Management of Internet Address Space December 1994
address space management regime
However it is this policy failure to efficiently utilise the IPv
address space through inadequate address pool management policies
rather than the exhaustion of the pool per se which is perhaps
driving force to design and deploy an evolutionary technology to IPv
which possesses as a major attribute a significantly larger
space
It is also appropriate to conclude that any outside observer of
IPv6 refinement process will look to see if there is any evidence
experiential learning in address management policies. If there is
be a successor technology for IPv4 it would be reasonable
anticipate that associated address pool management mechanisms show
greater degree of understanding of public resource space
capability in the light of this experience. If no such evidence
forthcoming then there is no clear mechanism to instil
levels of consumer and industry confidence in such technologies
such a way which would admit large scale public deployment
irrespective of the technical attributes of the successor technology
Such potential mechanisms may include pricing components
of the actual size of the address resource, given that the number'
uniqueness is a resource with inherent market value irrespective
whether scarcity pricing premiums are relevant in such an
space
It is also appropriate to conclude that continuation of
address space management policies run a very strong risk
restrictive and monopoly-based trading in address space,
consequence of the same trading practices being expressed within
deployed Internet itself
The immediate action considered to be most appropriately aligned
both the interests of the Internet community and the broader
community is to examine Internet address space management
which include pricing as well as policy components within the
management mechanism, and to examine the application of
mechanisms to both the existing IPv4 address space, and to that
any refinement or successor Internet technology base
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RFC 1744 Management of Internet Address Space December 1994
6.
[1] Gerich, E., "Guidelines for Management of IP Address Space",
1466, Merit Network, Inc., May 1993.
7. Security
Security issues are not discussed in this memo
8. Author's
Geoff
Australian Academic and Research
GPO Box 1142
Canberra ACT 2601
Phone: +61 6 249 3385
Fax: +61 6 249 1369
EMail: Geoff.Huston@aarnet.edu.
Huston [Page 12]
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